Northwest Automotive Cluster Development Strategy 2009 to 2019
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Northwest Automotive Cluster Development Strategy 2009 to 2019 January 2009 - 1 - Contents Page No. Executive Summary 3 1. Purpose of the Strategy 5 1.1 Key Objectives 1.2 Links to Regional Manufacturing and Economic Strategies 1.3 Measures of Success 2. Policy Context 6 2.1 Background 2.2 New Automotive Innovation and Growth Team (NAIGT) 3. Market Analysis 8 3.1 Sector Definition and Size 3.2 Global Issues, Trends and Drivers 8 3.2.1 Global Competition 3.2.2 Overcapacity 3.2.3 Consolidation 3.2.4 Outsourcing 3.2.5 Environmental Legislation 3.2.6 Consumer Demand 3.2.7 Technology 3.2.8 Skills and Employment 3.3 The Northwest Automotive Cluster 11 3.3.1 Economic Profile 3.3.2 Size and Scope 3.3.3 Supply Chain Analysis 3.3.4 Value Chain Analysis 3.3.5 Business Sectors 3.3.6 PESTEL Analysis 3.3.7 Strengths, Weaknesses, Opportunities and Threats 3.4 Future Trends 19 3.4.1 Logistics and Infrastructure 3.4.2 Technology 3.4.3 Design & Manufacturing Processes 4. Cluster Vision 20 5. Strategic Themes 22 6. Activities to Deliver the Strategy 24 6.1 Activities 6.2 Alignment with Regional Manufacturing and Economic Strategies 6.3 Indicators of Achievement 7. References 28 Appendix 1 Sector Analysis – Evidence Base 29 Appendix 2 Activity Plan - 2009 to 2019 30 Appendix 3 Summary of Northwest Automotive Cluster Strategy: 2009 – 2019 32 - 2 - Executive Summary The overall vision for the cluster is to have: “A globallyA globally competitive competitive cluster with world-classcluster with standards world of class excellence standards in Manufacturing, of Engineering, Supply Chain Management, Innovation and Workforce Skills”. excellence in Manufacturing, Engineering, Supply Chain Management, Innovation and Workforce Skills Based on the evidence gathered four strategic themes have emerged: ST1 Support the regional sector through the current economic situation by, 1.1 understanding the impact it is having and provide support where possible 1.2 preparing the sector for a future upturn 1.3 ensuring all public sector support is co-ordinated and customer focused ST2 Enhance current supply chains by, 2.1 enhancing the logistics capability of the vehicle manufacturers 2.2 providing the right infrastructure and facilities 2.3 developing people with the right skills 2.4 supporting continued investment in the regional based companies ST3 Develop future value chains by, 3.1 exploiting new/emerging technologies 3.2 building on and exploiting regional competencies 3.3 facilitating collaborative networks 3.3 supporting inward investment ST4 Respond to the environmental agenda by supporting companies to, 4.1 use resources efficiently 4.2 minimise waste 4.3 respond to climate change The primary context for ths strategy is the Northwest Regional Economic Strategy and the Northwest Manufacturing Strategy. The findings from a mapping study undertaken in 2007 (5) and the additional work undertaken by the Institute for Manufacturing at Cambridge University (6) together with intelligence gathered regionally, nationally and globally regarding the issues, drivers and future trends in the sector have all informed the strategy. The evidence gathered examined the context as well as the structure and configuration and capabilities and competencies of the cluster. The findings are summarised below: - 3 - Strategic Context: • The current downturn in the economy is having a major impact in the sector and is affecting the whole of the supply chain. • The vehicle manufacturers and their related support companies are the prime sectors for employment and economic activity. They are also under significant threat and need to maintain their competitive position within their parent company group . • To maintain employment levels it will be necessary to attract new business into the region. • Multi-nationally owned Tier 1 suppliers are under threat regarding future investments since the majority of them supply out of the region and in some cases outside of the UK. • The current exchange rates are making UK based suppliers more competitive in terms of cost than their European counterparts. • The smaller companies (tier 2 and 3 suppliers) are in the main locally owned, responsible for their own value chain and can determine their own strategy. • Public sector initiatives are fragmented, reactive and confusing, with awareness limited to vehicle manufacturers. Cluster Configuration/Structure: • The traditional industry classification for the Northwest automotive cluster would benefit from alternative perspectives based on their value chain footprint and supply network configuration. • The majority of the automotive companies in the Northwest work independently of each other. • There is significant variation in the material and financial flows in and out of the region’s vehicle manufacturers and consequently their contribution to regional/national value-add. • Tier 2 companies are increasingly located outside the region. • The value-chain of smaller firms is within the region, but amongst the larger vehicle manufacturers it varies considerably with some having either a European or global footprint. • Logistics and infrastructure is of particular interest to vehicle manufacturers but not particularly at Tier 1 and below. Cluster Capabilities and Competencies: • Innovation is seen as well managed at company level, but regional innovation capability is seen as a weakness, with no regional strategy. • There is potential to use current regional competencies in just in sequence (JIS) capability to promote more local outsourcing, • There is a skills deficit at graduate engineer and technician level, although numbers suggest a ‘cohort’ scale approach is required to develop a highly skilled group to support the regional needs. • There is a need to upgrade the business processes of Tier 1’s (and Tier’s 2/3s); this is recognised by both the vehicle manufacturers and the Tier 1’s themselves. • There is a lack of knowledge on the capability of the Northwest automotive sector. • There are exemplar supply chain competencies within the Northwest which should be shared with non-competing partners. Appendix 1 provides a summary of the sector analysis gathered from the recent mapping study (5) and the work undertaken by the Institute for Manufacturing at the University of Cambridge (6). The implementation of the strategy is through the delivery of an industry led rolling 3 year action plan. A high level 10 year Activity Plan is presented in Appendix 2. Appendix 3 provides a 1 page summary of the strategy, evidence base and activities to deliver the strategy. - 4 - 1. Purpose of the Strategy This document sets out a ten year strategy for the Northwest Automotive Cluster and identifies a series of key activities to deliver that strategy. In developing the strategy consideration has been given to the global issues, trends and drivers in the industry. Extensive consultation has taken place with key stakeholders including automotive companies within the regional cluster. Consideration has also been given to the Northwest Manufacturing Strategy, the Regional Economic Strategy and the initial findings from the New Automotive Innovation and Growth Team initiative. The automotive sector in the Northwest has been identified as a key internationally competitive sector for the region. In order to sustain and grow the sector it is important therefore that the stakeholders have an informed and industry led strategy. 1.1 Key Objectives The key objectives of the strategy are to: • Support the cluster through the current economic situation. • Ensure the continued presence of and future investment in the regions’ automotive manufacturing community. • Be recognised nationally and internationally as a premier location for automotive manufacture. • Develop a world-class automotive supply base that can compete in the global market. • Exploit expertise which is relevant to the present and future manufacture of vehicles and automotive components in the region. • Ensure that the companies within the cluster respond effectively to the global environmental agenda. 1.2 Links to Regional Manufacturing and Economic Strategies The strategy for the automotive sector is aligned with the regional manufacturing strategy and regional economic strategy. More specifically the strategy seeks to, • Support businesses to develop productivity, enterprise and skill levels • Help businesses to work smarter and increase their capacity and capability to innovate • Improve the interaction between businesses and the science/HEI base • Help companies respond to global opportunities and risks • Support companies to use resources efficiently and respond to climate change • Develop a highly skilled workforce at all levels • Improve the image of manufacturing • Ensure that places, spaces and infrastructure are fit for the purpose of manufacturing. - 5 - 1.3 Measures of Success The key measures of success of the strategy are: • Continuing presence of a significant automotive cluster in the region which is bigger, better and stronger. • Continued investment into the regionally based global automotive companies by their parent companies. • The presence of a common sequencing/logistics park for the sub assembly and sequencing of components into the region’s vehicle manufacturers. • Increase in GVA of the cluster. • Increased output from the vehicle and component manufacturers in the region. • Increased levels of overseas export. • Increased level of employee skills relevant to the current and future needs of the companies in the cluster. • New inward investment